Natural resources have always been the moot point for many a conflict and have tempted Kings and kingdoms into conflicts and wars since ages. A quick journey across our history would be enough to realise that the mightiest regimes have made planned moves to conquer natural resources – be it precious minerals, radioactive elements, energy resources, drugs, water or even human power. Talking about modern history, countries like US, UK and other Western powers have invaded nations in search of human slaves to natural gas.

Amidst all this, the bad news is that the era of cheap natural resources is definitely far gone. Natural resources and illegal occupation are very closely linked together; yet the correlation is largely ignored. The one time champion and monopolist nation of natural resources today is finding it expensive to explore its own natural wealth and is rather depending on imports. As per the US Geological Survey, 2011, United States imports 93 per cent of its antimony and 100 per cent of its bauxite and indium, 50 per cent of its lithium, and astonishingly, 100 percent of its rare earth metals. In just two decades, the tables seem to have turned completely. Two decades ago, China was the largest oil exporter, and today it’s one of the largest importers. So much so that China’s consumption of essential metals has doubled in the last 10 years and is expected to double again in the next few years. Today, against all the odds, China has made its presence unshakeable in most of the Latin American and African nations. I have, in some of my previous editorials, written on how China is completely into Africa in all economic and non-economic sectors. And why not! Latin America and Africa are precisely the two continents, which still have enough natural resources to meet the global demands for years to come, and to make any country controlling these resources economically powerful for years to come. For instance, in 2007, China bought a 15,000 feet mountain in Peru for a whopping $3 billion. Mount Toromocho, which is spread across 138 km, has proved to be one of the most productive copper mines in the world and is reaping a profit that is almost 2000 per cent of the initial investment.

China is not leaving out promising opportunities even outside these two continents. China has recently signed a “laptops for pork” deal with Canada which will allow China to become a prominent player in the meat industry in no time. Simultaneously, China is exploring opportunities to make it big in the fertilizer industry. China, a few years ago, mobilised its state-owned enterprises to bid for PotashCorp (POT), the Canadian fertilizer giant which is the largest producer of potash and third largest producer of phosphate and nitrogen.

On a closer look, the entire resource-grab spree would reveal a couple of interesting and economically-intelligent strategies. China is tapping into the resources of those nations that are relatively weaker. In other words, they are entering nations that are politically weak and have poor governance (including India).

Moreover, these are precisely those nations where the West had never paid heed and had left them to their own fate. Various nations of Latin America, which were subjugated by the West through sanctions and regular invasions, and Africa where the West only went with an objective of plundering and looting, are the prime-interest areas of China. The dragon nation is offering countries in these geographies trade offers that are more than lucrative. Not only is China commercialising their dead industries but is also allowing them to develop support infrastructure. In any case, it’s a win-win situation for China from both the ends! Such deals give them free access to hinterlands and hidden resources and the support infrastructure removes the transportation bottlenecks too. Read More....

If in the world one needs to locate a string of pearls and a ring of fire at the same point, it has to be, without any doubt, India. For almost the last six decades or so, our neighbours have been attacking us on all fronts and as a nation we have been consistently acting as a sitting duck. It’s obviously a matter of immense pride that India, in its history of existence, has neither invaded any foreign land nor attacked any nation with an intention of occupying foreign territory. But then, against such a strong principle, a country also needs to develop similar strong counter-principles. It should have had a mandate that it should be treated the way it treats others. This is where we fell flat. On the one hand, we do everything possible to make sure we as a nation treat geographical borders with the utmost respect and righteousness; but then, on the other, we have failed to sprinkle the same feeling among others. Unfortunately, we largely failed to protect our borders and give it the same respect that we give to others... and this happened probably due to the lack of our own political will. This is where and when our neighbours, who are eyeing our sovereign land since decades, encroached upon our lands.

There is no point digging into the past and writing about the acts of atrocities by our neighbours since years and the number of jawans killed in the process and the number of civilians who die every year and the loss of property as an aftermath and the feeling of insecurity that gets installed in the society as a result. In the last couple of months, almost all possible fronts of defense were broken, or I should say, insulted. I have written repeatedly in my previous editorials how China habitually, strategically and illegally enters foreign lands and eventually adds those encroachments to their map. Reiterating the same modus operandi, China has already stepped inside our territory and has installed army camps and a military base too, which was realised and acknowledged by our ‘sleeper-cell’ ministry weeks after the event. But then, what comes as a shocker is the recent move by the Chinese army, a move which is beyond diplomacy and even beyond the definition of audacity.

A week and a half ago, the Chinese PLA (People’s Liberation Army) troops stopped the Indian army from patrolling in the Indian territory. After illegally occupying a large chunk of our land and illegally setting up a military camp, PLA troops have now gone to the extent of preventing the Indian Army from patrolling along the Indian border, a border which is within our territory. PLA troops came with heavily armed vehicles and displayed a banner stating that the land was theirs, and thus stopped the Indian army from patrolling (in the Ladakh region) in the area surrounding two posts. Unlike our system, which leads to such demeaning results, the PLA has also built an observation post to keep an eye on the movements of Indian army. Read More....

Joseph R. Biden Jr. just became the first US Vice President to visit India in three decades. While India considers this to be a proof of its popularity and widespread influence, there is The People’s Liberation Army of China (PLA) proving us all wrong. PLA crossed the Line of Actual Control (LAC) into India for the nth time this year alone! That China is bullying India has become more a common headline these days – and during a time when India is busy with some ineffective verbal tactics to cajole and persuade its adamant, powerful neighbour. But all along, we’ve seen China adopting the carrot and stick approach while dealing with our nation. How have we reacted? Actually, the more pertinent question is – have we?

History stands testimony to the fact that India – more often than not – chooses to sit back and take the blow (or many blows-after-many!) than being proactive in its foreign policy. Is there a wiser justification to the fact that even a much smaller (and weaker perhaps) State like Pakistan has dared to wage war with us as many as four times in the last 65 years. Today, it even executes terror acts in our country. Still our authorities choose to remain still and silent! There is no question of meeting the Pakistani Head of State eye-to-eye! And presently, with great camaraderie between China and Pakistan, the two foreign forces are working hard to make their fellowship count – against their common neighbor. The two have in recent times only magnified India’s external and internal security concerns and are literally toying with India’s perception of xenophobia! And China isn’t just the only culprit – Pakistan is enjoying giving the “poke” too. If China has displayed open disregard for the sanctity of LAC, Pakistan is flouting cross-border ethics in Chimur and Ladakh.

That the United States is increasingly feeling the heat from China – whose ambition clearly is to eclipse US as a global geopolitical and economic superpower – is a fact unknown to only a few. Under such a circumstance, US wants to cook a potion to neutralise the Chinese poison. There is also deep resentment in America regarding Pakistan, as time and again it has come to public light that the country covertly works against the interest of US and its people. From giving shelter to Osama bin Laden to becoming a haven for a host of small and large, organized and unorganised terror groups, like the Haqqani network (that engages in asymmetric war against US-led NATO forces and the government of Afghanistan and is said to have tremendous support from influential elements within the Pakistani security establishment), US is increasingly finding Pakistan an unmanageable rogue State. Read More....

Pedigreed European brands – from Rolls Royce to BMW, from Armani to Marks and Spencer – all evoke awe inspiring respect and admiration. And that’s the case with many expensive European brands glittering in the lives of the rich and famous across the world since many decades (from Rajiv Gandhi’s classic Rolex to Saudi King Abdullah’ pristine fleet of Rolls Royces). These brands, marketed globally by a horde of European MNCs, also got visible support from governments in Europe under the premise that the larger these iconoclastic brands and MNCs grew, the more would grow Europe’s employment base. But as has now been evidenced empirically, contrary to common perception, MNCs and such brands have really not turned out to be the proverbial gold mines for European economies.

Far from it, as the situation stands now, multinational enterprises employ less than 1 per cent of the European industrial workforce; greater than 99 per cent of the workforce is employed in Small and Medium Enterprises (SMEs). That is a humungous difference and shows that SMEs are the real backbone of job creation in Europe contributing to 2/3rds of all private sector rosters and more than half of business value-added in EU. Even in R&D and innovation charts, the place of SMEs in Europe is right at the top. They are mostly micro-firms providing jobs to a few more than a handful per unit; and yet, the spread of the SME segment is so wide that it has emerged as the previously unheralded citadel of the European economy. Especially now, when the chips are down, SMEs are coming out to be veritable saviours and sustainers of the employment landscape in the continent. As big venture investments are hard to come by, EU is depending to a large extent on furthering the promise of SMEs and especially the potential of startups and entrepreneurships to take the economy forward and create jobs. It’s not as if the Union did not realize this. In 2006, the Competitiveness Council (responsible for promoting SMEs in EU) set a number of goals to be achieved through SMEs (like simplifying processes of commencing a start-up, cheaper and faster start-ups, and larger volumes of start-ups); by December 2008, the targets were renewed with more ambitious benchmarking. The policy efforts also tried to reduce bankruptcy rates, and doing away with impediments faced by budding entrepreneurs – like high entry barriers and taxation. The stress is now being given on certain specific business lines, like crafts and micro-enterprises, education and training entrepreneurship, audiovisual media, social economy and women entrepreneurs.

Even when seen globally, SMEs have a major role to play. Going by an OECD report, the SME segment accounts for over 50-55 per cent of the total GDP and employs around 60 per cent of workforce in developed nations while employing 95 per cent of total workforce in developing and under-developed countries. In many developed nations, SMEs were gradually made more competitive and productive by giving them topmost priority. Unlike what happens in India, SMEs were included in their national development strategy. Such initiatives allowed SMEs to gain momentum and attract huge investments. In UK, in 2001, a unique SME development policy was pioneered titled ‘Think Small First’ and was embedded with the national policy. Read More....

The opening of the first Starbucks outlet in South Mumbai in October last year triggered quite some frenzy among Mumbaikars, with long queues of venti-mocha-frap verve translating into a major rock concert hysteria. And it was all for a coffee shop! Imagine the burst of marketing energy from Starbucks to take advantage of this excitement. Within five months of opening its first outlet, four each were opened in Mumbai and Delhi (taking the footprint of the coffee chain to nine outlets in India). It reminded me of the kind of madness that was witnessed during the launch of Pepsi and the relaunch of Coke in India, way back in the early 1990s. Here’s the simple truth – our craze for foreign brands has never ceased, despite our progress in almost all dimensions of socio-economic parameters. Why? Because as a nation, experience has taught us that our brands have never quite had the gumption of American, British, European or even Japanese brands. The halo was and is missing. This lack of unique proposition in our brands is due to the shoddy products and services offered in the name of Indian brands!

In this new age of globalisation, our brands need to compete globally and not just nationally. In the past, so many Indian brands – from the Ambassadors to the Vimals – were whipped and almost but sent off packing when foreign brands came knocking. These foreign brands piggybacked on their global popularity and our lack of expertise due to substandard innovation. If India has to reverse the ongoing trend of the influx of foreign brands into its market, it has to invest on innovation on a large scale, and frame and implement comprehensive policies to support innovation.

The low count of patent applications that is filed in India is some warning. In 2011, only 42,291 patent applications were filed in India. China on the other hand saw 526,412 applications being filed – highest in the world that year, followed by US with 503,582 applications (source: World Intellectual Property Indicators 2012, released by the World Intellectual Property Organisation; December 2012). In the Global Innovation Index (GII) ranking 2012, India stood at a dismal 64th – two spots below where it stood in 2011! Shameful it is that India, in terms of GII ranking is last amongst the BRICs. No wonder, a June 2012 Standard & Poor’s report revised its outlook for the Indian economy and warned that India could become the first amongst all BRIC countries to lose its sheen! [The S&P report was titled, ‘Will India Be The First BRIC Fallen Angel?’] It is disheartening to observe that despite Sam Pitroda’s efforts to pump life into India’s innovation machine, and PM Manmohan Singh’s call to promote India as an “Innovation hub”, the country is still largely seen as a “screwdriver nation”, only capable of assembling together parts of foreign-branded products. Read More....

The People’s Republic of China may have initially missed out on industrial revolution that made the western nations what they are today and constrained China to an emerging economy in spite of its mercurial economic growth for the last three-and-a-half decades. But learning from the past, it is all set to become a front-runner in the virtual revolution, and is very ready to leverage maximum possible benefits out of it. In fact, it has gone a step further to set off cyber warfare with other countries in the congested and tightly competitive virtual world. And this time, it won’t settle for being a laggard, for it is heading fast towards its most cherished goal of becoming a global superpower!

Undoubtedly, the modern warfare is no more about the number of casualties or destruction of physical property. The new doctrines of war is all about attacking a nation economically and paralyzing it for years to come. An economically broken nation would not only destroy its human capital in the long run but would be politically fragile too. In order to showcase their supremacies, today, nations are not only stealing information that have high strategic value but also destroying trillions of data bytes in host servers, thus leaving victim nations at perils.

China has unleashed muscleflexing exercises through the cyber world and the focus is straight at its favourite enemy, the United States of America. In the real world though, despite being a permanent member of the UN Security Council and a full-fledged nuclear power, China knows it well that it is still not at par with the western armament technology, especially to that of US, UK, France and Russia. The desperation to bridge the gap forms the cornerstone to China’s cyber warfare rationale. Time and again, it has attacked various military and intelligence websites – what we call espionage – to gain access to data, technologies, blueprints, strategies and geo-strategic coordinates. To a large extent it is successful too, as there are increasing concerns in US and UK establishments regarding the price they might have to pay as a result of this on-going cyber war. However, the cyber battle is not just confined to military espionage. It includes intelligence, economic and social espionage too. Back in 2010, computers at diplomatic posts of around 103 countries were intruded by China’s cyber-spies. Phishing attempts were also made on the American power grid, and its financial records and air traffic control systems. Read More....

Just a couple of months back, the entire global media fraternity was talking about the next probable war between China and Japan over the issue of a small group of islands in the East China Sea. Just when people thought that the issue was cooling down, last month, a delegation of former US officials submitted a report to Hillary Clinton that the dispute could spin out of control and result into a military confrontation; add to that China’s recently declared intentions to deploy marine surveillance drones to track maritime activity around the cluster of islands from where the conflict originated. The entire issue is certainly far from over, with both the nations in no mood to step back. There is, of course, nothing new in the conflict between Japan and China. Through centuries, these two Asian neighbours have been brutal to each other – politically, economically and militarily. The Japanese monarchy before World War II was notable for their imperialistic intentions – they invaded China in 1931 to mark the beginning of a violent, 14-year occupation of the land, finally retreating only after the World War II reversals in 1945. However, in the post-World War geopolitics, the foreign policy trajectory between the two nations has swapped its direction. Since the past few decades, Japan has sought to maintain a nice-guy image, while on the other hand, China has wanted to treat Japan slightingly. Japan’s cooperative and accommodative foreign policy acted as a silver bullet for its economy, which saw an unprecedented growth from 1950s till 1980s. That period saw Japan barging into the elite club of developed nations (the only Asian country to accomplish the feat then) and becoming a part of G-7, or the seven most industrialized states in the world. That’s a remarkable accomplishment, considering the fact that this was the same country that had literally been reduced to ruins in the Second World War and also the fact that none of its Asian counterparts could mirror Japan’s subsequent economic achievements. China, like Japan, started a new journey from 1949, when the Mao Tse Tung-led Communist Party of China overran the country and gained control on its governance. But unlike Japan, China, in the first three decades, emphasized largely on a military buildup. Amidst this journey of these two Asian giants, one thing represented permanency – that these two nations won’t walk hand in hand. Interestingly, Japan’s ruling Liberal Democratic Party had promised before the 2009 election that Japan would be more muscular in its foreign policy and had hinted then on a shift from being a US-backed nation to being one with a more Far East integration, including with China. However, that didn’t happen. The recent happenings have in fact worsened the situation. The first, significant barrage came from the Japanese government in early September 2012, when they revealed their intentions to purchase three disputed islands in East China Sea – a move that led to their fragile relationship with China nose-diving in no time. China pledged to thwart Japan’s intentions, and in response, sent three fishery surveillance ships to the territorial waters near Senkaku, the group of islands in contention. In return, Japan adopted an aggressive foreign policy stance and announced that they would take the Chinese bull by the horn – by mid September, Japan had officially bought the islands. Read more....

The recent case of Indian traders being kidnapped in China has opened up a can of worms. Apart from the case revealing weaknesses in the Chinese judiciary (as I had highlighted in an editorial a few weeks back), it has also brought out in the open something that traders from India (and other countries) were facing for a long time but not speaking about openly. The big trade that happens between India and China is through the scores of wholesalers operating out of wholesale markets in India like the Sadar Bazaar in Delhi. These are not the big guys who prefer getting into litigation that easily; they also aren’t amongst those who operate with lawyers and bigger paraphernalia. These are smaller traders, though huge in numbers, who go to Chinese towns like Yiwu in particular and pick one or two containers of goods worth Rs. 30 lakh to a crore once every quarter. And they now fear entering China. The question is why? Can one incident of kidnapping shake up an entire community of traders, especially when China is such a good bargain for them? Or was this not that stray an incident after all?

Consider the case of Manish Rewari. He has been doing business in exactly the same town of China for years now. And swears by the advantages that China gives him in his business as he shows off a fascinating watch that he is wearing while narrating his story! He had first seen the same watch in a wholesale outlet in Karol Bagh (a shoppers’ paradise near Central Delhi). The shopkeeper quoted Rs.22k as the best price for the watch to Manish. Not be outdone like normal customers, this China believer – in his next trip to Yiwu – went around various shops and found out exactly the same watch. And the price for a single piece was Rs.2.5k; and for bulk order of more than a hundred pieces, Rs.1.2k per piece. A watch enthusiast, he picked up only one watch for his consumption.

If that sounded nice, just a trip before this particular trip, Manish’s experience was not as good. He used to work with a Chinese agent then. During his previous trip, he had struck a small deal and purchased goods for Rs.75k through the said agent. The agent took the money, delivered him the goods, but never paid the original seller. The next time, when Manish came and tried to directly deal with the seller, the moment he provided his old receipt with the previous agent’s name to show the price at which he had bought the goods in the previous trip, the seller pounced upon him. His grudge was that he had not received the money for that particular transaction. Manish very courageously tried to defend himself by saying, truthfully, that he had obviously paid up for the same. This he did despite knowing “that they [the Chinese seller] could pick him up and make him disappear”. His reasoning clearly was of no help because soon, there were scores of the seller’s people and henchmen who came from all around and surrounded Manish. Sensing trouble, Manish approached the nearby police, who in their very usual unfriendly manner told him in Chinese that they were there to protect only the interest of the Chinese. That’s when good sense prevailed. Manish knew that he had come for just three days and had a lot of deals to strike. And this would only get messy. And spending a few days in jail like a few others he had heard of was not a great idea. Manish grudgingly agreed to strike a deal with the disgruntled seller, and paid fifty percent of the pending money again as settlement (since it was too small an amount) and fortunately got away.

This year, however, Manish is not ready to go to China anymore; well, almost. He now works through an Indian agent. The recession hasn’t been great for businesses and he fears that even the Indian agent might not have paid up properly to the Chinese sellers (though Manish has paid his entire pending Rs. 37 lakh for his last imported container). The fear is that the Chinese sellers might again pounce on him. “It’s undoubtedly a fearful situation. The question of safety for the foreign trading community is totally missing despite us being such regulars and buying so much from them. There is no helpline. And they are just not ready to listen to our version. Someone messes up and someone else pays for it. The recent kidnapping has only brought to highlight the fears and trauma people have been going through for a long time despite doing big business there,” he says, elaborating further. He says something more that has been haunting a lot of Indian professionals in Gurgaon of late, due to a new phenomenon I had outlined, again in a previous article of mine, on how Chinese companies are now doing business in India only when they are allowed to get Chinese workers here (in effect, easing out their employment problem through projects in India).

The grudge the people working in Gurgaon have – as they see scores of Chinese people all around them working on various projects – is that not only are we allowing Chinese people to take our jobs, we’re also accepting their behaviour to simply look down upon Indians despite working in India itself (rightly or wrongly, is another question of course). Manish says exactly the same, “We do so much trade in China but they just don’t treat us with enough respect and that is a key reason behind this high handed semi mafia behavior.” Read More....

Ever since the American economy went bust and the European economy has been going down, it’s sad to see my favorite magazine, The Economist, frantically trying to defend the wrong and go wrong by criticising the right. Time and again. Just a handful of weeks ago, in their frantic effort to criticize everything Chinese and everything non-market oriented, The Economist did a cover story called The Rise of State Capitalism (January 21-27, 2012). Basically, the story talked about how economies like China and even India are becoming more dependent on large public sector units and how this is bad blah blah. The obvious supposed scare is that public sector corporations are inefficient, have time overruns, invariably have cost overruns, have ingrained corruption and so on! The real scare is the growing might of China, of course!

Our group is into almost all kinds of consulting activities and we rarely come across a private sector company where an executive doesn’t ask for a bribe before awarding a big contract. Sometimes we’ve even found out that a competing firm has used sleaze to satisfy the client being prospected and thus has obtained the deal. From Enron to Olympus to Accenture, there is no dearth of large corporations which have made the most corrupt of choices. Large companies – whether public or private – always have within them certain ingrained issues. And what differentiates them from one another are systems and leadership. Under a different leader, the same GE could be the world’s best benchmark example while under another, in just a matter of a few years, it could be a struggling joke! The same it is with the public sector. If systems are put in place like the private sector, there is no innate reason why public sector corporations should be inefficient. And if systems go wrong, then you could even have a Reliance being rated worse than a public sector company to deal with.

As a management teacher, at least that’s what I have believed. That the former USSR failed or that China is nondemocratic doesn’t mean that the public sector idea is wrong. The only truth is that governments must know what to plan and what not to. A government, for example, has no business being in the luxury hotels sector; at the same time, in countries like India, the government not being in health or education is a crime. There are wonderful examples of public sector successes and one of them is the Delhi Metro Rail Corporation (DMRC)! It’s a case study of our times.

In the midst of times where corruption was the high point and scams were unearthed left, right and centre, in the midst of the massive CWG scam, here was a corporation in the same government sector, under the control of similar ministers and bureaucracy and in the same country, with a key role during the same Commonwealth Games. And yet, the legacy of DMRC has been diametrically opposite and mind blowing! For records, the Delhi Metro has almost always completed projects before time. In fact, the first phase of the DMRC project was completed in seven years instead of the planned ten years. DMRC has had absolutely no cost overruns. Its efficiency is beyond any kind of international comparison with the trains being on time 99.97% of time! That too with a very strict guideline of one minute deviation as the standard of excellence – while internationally, in most countries, they term a 3 min deviation from scheduled time as on time! By all international standards, the Delhi Metro is world class and it was competed in the second shortest time in the history of the world as far as metro constructions go! And finally, to top it all, it has had no instance of corruption and it is as massive a corporation as it gets!

So what made the difference? Meet the man who was at the helm of it all Mr. E. Sreedharan and you will know! I have a theory – the corruption index of a man is always on his facial muscles. It’s not about being traditionally good looking or bad. It’s about the reflection of your thoughts on your face. The man who spends his life asking for bribes has a dirty bribe-seeker look on his face along with the look of someone who has an inner fear of doing wrong and getting caught. A reason why all the professors in our institute look distinctly different from the majority of the politicians in our country! Yes, E. Sreedharan looks like the former ones, my professors who taught me! Clean, honest and sincere! And when he speaks, he exudes integrity – growingly the rarest virtue!

“Four simple principles,” is how he explains his success story! The key to DMRCs success has been integrity! Yes, that’s what Sreedharan looked for first in his people! He wanted a free hand in selecting people and consequently got his old work acquaintances and others who were known to be totally clean to work with him; yet, he fired them at the first instance of an attempt to be corrupt! Integrity was his absolute top priority. It was followed by something that is interestingly massively linked to integrity! Professional excellence! The rule is simple. If you are talented, you are in a better position to not just deliver high quality results on time but also be more ethical. Those are the non-talented guys who retain their place mostly through corrupt practices! So within DMRC, Sreedharan had no place for the less talented! The focus on efficiency was so much that he did away with clerical staff! Today’s offices required no clerks; in fact, that’s from where the delays and corruption start! With these two key principles in place, the job was more or less done! Read More....

In November 2011, Wang Sixin, a law professor in the Communication University of China, opined, “In India, the common law tradition allows judges to begin litigation just based on a news report or a letter from a petitioner, whether [the petitioner is] a lawyer or not. China needs to adopt this practice.” This suggestion of his sounds quite ostensible considering a nation where freedom of speech and expression is highly censored and the judiciary has been used to further this dictatorship of the State. The same was the cruel case in Yiwu city with the Indian diplomat, S Balachandran, who was denied food and medicine despite his repeated requests that he was a diabetes patient; this went on till he actually collapsed and had to be rushed to the hospital. Balachandran was trying to present the case for the release of two Indians who had been kidnapped by Chinese traders because their Yemeni firm had not yet paid some dues. This blatantly ruthless and inhumane attitude displayed by the Chinese judiciary almost in connivance with the Chinese businessmen defines the attitude of the Chinese administration. Till a few years back, if you were a Chinese villager having more than one child, the government tractors would have mowed down your residence – an act that defines the Chinese sense of cruelty, or should I say Chinese torture. Needless to say, the poor villagers never got any support from the judiciary.

The Chinese judiciary has never been independent! In fact, it was in a muddle especially during the Cultural Revolution that curbed its functionality completely between 1966 and 1976. The jurisprudence was revived after 1976 and thence, a new legislation came into being by the end of 1980 under the purview of Organic Law of People’s Courts. Consequently, a new era began, marked by a paradigm shift in the country’s legal system! On the brighter side, the system was made very strong in order to encompass the entire nation under the judiciary system. The number of judges and associate judges, which was at meagre 50,000 in the 1980s was increased to 131,460 in the 1990s, and then again augmented to 258,000 in 2000s – an increase of 416 per cent! This means that the judges-to-population ratio of China is now around 1 to 8,600, which is in close range to the US ratio of 1 to 8,826 – something that we in India are attempting to dream about since the last 64 years!

Despite these impressive figures and massive infrastructure, the Chinese judiciary suffers from numerous problems that affect the very nucleus of the system. It is neither independent, nor are there any standards to determine their independence. The single State party’s influence doesn’t permit the judiciary to be impartial and unbiased, especially since the Communist Party of China keeps perpetually interfering with the court’s proceedings. Clearly, a non-democratic setup never had any space to acknowledge and appreciate the essence of a free and independent judicial system. Further, the funding of the judiciaries is not streamlined uniformly as more developed regions like Beijing, Shanghai or Guangdong have substantially higher disposal of resources than other regions. With better infrastructure, communication and salaries, these regions attract the best judges whereas the remote areas face veritable financial hardships – and lack of quality judges. This has forced many backward regions to augment litigation fees to discourage the parties from filing law suits! As of date, a discriminatory funding ploy by the Chinese government has led to a situation where the jurisprudence of certain areas has been pushed to the limit! In simple words, flow of funds is decided by the State depending upon the freedom the government wants to provide to a particular province. Thus, the remote areas are allocated less funds to ensure a weak judiciary that eventually deters citizens from filing suits and from protesting against atrocities. The residents of such targeted areas are kept entrapped in a situation wherein breaking rules would lead to serious perilous consequences.

Globally, the judiciary system – a true pillar of the economy – is kept independent of political interference and has absolute power with independent staffs that hail from no political party – be it the ruling party or the opposition or any third party. Contrary to this philosophy, China’s judiciary is not separated from its political process. There is no separation of power between the government and the judiciary! The National People’s Congress (NPC) reigns supreme there and has every right to undermine and destabilize the independence of judiciary. The judicial appointments (judges and jury members) are under the ambit of NPC and so is the supervision of it. Thus it is this ruling party that literally decides the person who would chair the court – or shall I say, would decide the fate of the aggrieved party. Putting things into a better perspective, one needs to have a political party affiliation to be a judge in China. As a quid pro quo, it is essential for the judges and the jury to follow the decree of party leadership and perform a variety of functions! The court also acts as a civil law magistrate and has to find evidence for any criminal prosecution that is being handled! A judge’s role is more like an intermediary’s, who explains the policies brought about by the government (or at least the legal side of such policies)! Therefore, performing the role of a judge – as it is being performed in most countries – is only a miniscule part of a judge’s assigned functions and not the prime duty. Alarmingly, a judge in China might not ever have given any verdict but might have performed other roles stated above! He might be merely a little better than a party worker, yet he is called a ‘judge’. In this way China has bloated the figure of its total size of judges – but in reality it is just a farce.

Most interestingly, the Supreme People’s Court (SPC) has to submit a periodic report of its functioning to NPC for approval and review. Thus, today, NPC is seen poking its nose in almost all judicial affairs and individual cases and manipulating the court’s decision. Local governments have the power to literally advice the court on cases related to the government and also forces the courts to bluntly dismiss any appeal that can be harmful during proceedings. Local courts rarely favour the public and most of the times, drag the cases for indefinite time period. The appointment of judges is also influenced by local governments which make it impossible for the courts to be impartial especially in remote areas where the government can’t reach frequently. The lower courts approach the higher courts for directly getting involved in judgments. This snatches away the opportunity of the litigant to appeal before the higher courts, which may have already given an uninformed verdict without giving the claimant a chance to present the case before the higher courts! In essence, these courts have puppets setup by the local government. Read More....